Friday, December 18, 2009

Nov. Jobless Rate Fell in Almost 3 of 4 States

1. Thirty-six states and the District of Columbia recorded over-the-month unemployment rate decreases in November, 8 states registered rate increases, and 6 states had no rate change, the Bureau of Labor Statistics reported today. 2. In November, nonfarm payroll employment increased in 19 states and decreased in 31 states and the District of Columbia. The largest over-the-month increase in employment occurred in Texas (+17,300), followed by Ohio (+5,400), Georgia (+4,800), and Arizona and Iowa (+4,300 each). Alaska experienced the largest over-the-month percentage increase in employment (+0.5 percent), followed by Iowa (+0.3 percent).

How could payrolls decrease in 31 states + DC, and there be a reduction in unemployment? BLS is a direct to cabinet secretary right? Given their propensity for misstating the facts, forgive me if I view this with a grain of salt.

Anon writes: “How could payrolls decrease in 31 states + DC, and there be a reduction in unemployment? BLS is a direct to cabinet secretary right? Given their propensity for misstating the facts, forgive me if I view this with a grain of salt.”

Anon, the unemployment rate nationally is determined by the CPS and the state unemployment rates are modeled from the LAUS program. Payroll employment is determined independently from a completely different program, the CES. So, the CES payroll employment can fall while the nation and state unemployment rates falls. I’m a Republican (sort of) and there is no hanky panky going on with the numbers.

Jandos writes: “Hmmm, maybe its the season when more part time and temp people are hired…What do you think?”

Jandos, those numbers are seasonally adjusted, which means the seasonality is removed from the numbers leaving the trend in unemployment.

Stryder writes: “Wow, the economy just discovered CHRISTMAS!”

Stryder. See above. The numbers are seasonally adjusted.

James Fraasch writes: “More people ran out of unemployment benefits and more people just simply gave up. The drop in unemployment is NOT because people started finding jobs. It's because the BLS increased the number of people who dropped out of the labor force.”

While it is true that the number of people dropped out of the civilian labor force increased, what is not true is that you are not counted as unemployed if you run out of unemployment benefits. You are counted as unemployed if you are actively seeking employment and cannot find a job, whether you are or are not collecting unemployment benefits. In fact, only a minority of those who are unemployed are actually collecting unemployment benefits.

Tom, thanks for that clarification. What do you think the BLS is doing with the labor force? I would not guess that it is simply shrinking because more people are retiring than are entering the market for the first time. It would seem to me that absent massive retirements, the labor force should always be increasing until we adopt a Chinese style "one-child" policy.

Beginning in the 70s, the labor force participation rate began increasing as more women entered the labor force. But it peaked around the 1st quarter of 2000 and has been mostly declining ever since. Perhaps the baby boomers are entering retirement?